Standard Bank expected its profits and earnings to grow substantially for the year ended 31 December 2023 (FY23).<\/p>\n\n\n\n
In a trading update for the year, the group said that it is satisfied with a reasonable degree of certainty that its earnings per share (EPS) will increase by between 25% and 30% from 2,074.1 cents to between 2,592.6 and 2,696.3. <\/p>\n\n\n\n
Headline earnings per share (HEPS) are also expected to increase by between 25% and 30% from 2,050.4 cents to between 2,522.0 and 2,624.5. <\/p>\n\n\n\n Although profits are expected to increase, credit impairment charges will also increase after a change in methodology. <\/p>\n\n\n\n Financial services providers across South Africa have highlighted increased credit impairment charges, with consumers and businesses struggling to pay back debt amid a challenging macro environment. <\/p>\n\n\n\n In a voluntary trading update for the year ending 31 December 2023, Absa said that it expects its credit loss ratio to exceed the through-the-roof cycle target range of 75 to 100 basis points due to high interest rates. <\/p>\n\n\n\n In its financial results for the first half of the 2024 financial year, Woolworths Financial Services, saw its annualised impairment rate increase to 6.3% from the 5.5% in the prior period. <\/p>\n\n\n\n \u201cWhile this reflects the strain that consumers are under in the current macro-economic environment, it is reducing from the peak of the last quarter of the previous financial year,\u201d Woolworths said.<\/p>\n\n\n\n Standard Bank mended the methodology for recognising interest on Stage 3 loans, which should result in an increase in net interest income and an equal and opposite increase in credit impairment charges.<\/p>\n\n\n\n The change, which has been retroactively applied to the 2022 financial year, will mean that the net interest margin and credit loss ratio will be higher than previously guided. <\/p>\n\n\n\n<\/td> FY22<\/td> Range<\/td> FY23 Range<\/td><\/tr> HEPS<\/td> 2 050.4<\/td> 23% – 28% higher than FY22<\/td> 2 522.0 to 2 624.5 <\/td><\/tr> EPS<\/td> 2 074.1<\/td> 25% – 30% higher than FY22<\/td> 2 592.6 to 2 696.3<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n 2022<\/strong><\/td> As reported<\/strong><\/td> Adjustment<\/strong><\/td> Restated<\/strong><\/td><\/tr> Net interest margin, basis points<\/td> 425<\/td> 7<\/td> 432<\/td><\/tr> Credit loss ratio, basis points<\/td> 75<\/td> 8<\/td> 83<\/td><\/tr> Cost-to-income ratio, %<\/td> 54.4<\/td> 0.5<\/td> 53.9<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n